The hashtag#banking, hashtag#financial services, and hashtag#insurance (hashtag#bfsi) industry operates in a dynamic landscape shaped by changing customer expectations, emerging technologies, and new competitors. To stay ahead, BFSI companies are increasingly looking to artificial intelligence (AI) and specifically generative AI to drive critical business outcomes. In this post, we’ll explore what generative AI is, key ways it can transform the BFSI sector, use cases, and the promising return on investment (ROI) possible by deploying generative AI solutions.
What is Generative AI?
hashtag#GenerativeAI refers to machine learning techniques such as deep learning and neural networks that allow systems to generate new, original content and output based on patterns in data. Unlike other approaches, generative AI models are not programmed with explicit rules. Instead, they analyze large datasets to derive their own insights and content without human involvement. Leading examples of generative AI include natural language models like GPT-4 for generating text, DALL-E for creating images from text prompts, and WaveNet for synthesizing human-like audio.
Key Benefits for BFSI
Here are some of the biggest ways generative AI can benefit BFSI companies:
- Personalized recommendations – Systems can analyze customer data and transaction history to provide tailored product and service recommendations. This improves targeting and conversions.
- Streamlined operations – Tedious, repetitive back-office tasks can be automated using generative AI. This boosts efficiency and reduces costs.
- Improved risk modeling – Advanced neural networks identify complex patterns in financial data that humans can miss. This enables more accurate fraud detection and risk forecasting.
- Hyper-personalization – Chatbots and virtual assistants with generative abilities deliver customized conversations, recommendations, and insights to each customer.
- Enhanced customer experience – Human-like interactions with conversational systems provide timely, consistent support across channels, improving satisfaction.
- Faster innovation – Rapid prototyping of new financial products, insurance policies, campaigns, etc. is possible by generating and testing variations.
Use Cases
Here are some specific ways generative AI is already being applied across banking, insurance, and financial services:
- Copywriting for marketing campaigns and website content – Automated through natural language generation tools. This can improve conversion rates by up to 50%.
- Customer service virtual agents – Text and voice-based chatbots can resolve routine queries 24/7, handling over 70% of inquiries without human involvement.
- ID document verification – AI systems quickly extract key details from ID photos for KYC and onboarding. Reduces drop-off by 5X.
- Claims processing – Details from forms, emails, and attached documents are automatically extracted to validate claims faster. Decreases resolution time by 30-40%.
- Portfolio management – Algorithms generate personalized investment portfolio recommendations tailored to each customer’s risk appetite and goals. Results in 25% higher returns.
- Fraud prevention – Anomaly detection models identify suspicious transactions in real-time, with 90% accuracy and 10X better than legacy rules-based systems.
The ROI of Generative AI
According to research by Accenture, AI has the potential to increase profitability by an average of 38% by 2035 across 16 industries, including BFSI. The ROI can be attributed to benefits such as enhanced productivity, lower costs, improved CX, faster innovation, and new revenue opportunities. More specifically for generative AI, typical ROI reported by early adopters in BFSI includes:
- Up to 20% increase in conversion rates from personalized recommendations
- 40% improvement in contact center efficiency
- 60-70% reduction in losses from fraud
By proactively embracing generative AI, BFSI companies can drive tangible business value while delivering better financial outcomes and experiences to customers.
With game-changing capabilities to generate human-like content, recommendations, and insights, generative AI is poised to remake financial services. BFSI companies that strategically deploy solutions powered by large language models and creative neural networks will be best positioned to boost profitability, outpace competitors and delight customers in the years ahead.
